PoS vs PoW: A Quick Update on Ethereum
The Ethereum camp is dividing, again.
The contention this time, as the much-awaited The Merge upgrade draws near, is not particularly about the crucial fork. Rather, it’s about forking the main Ethereum chain as it switches its consensus mechanism.
Yes, Ethereum is set to switch from the proof of work (PoW) to a proof of stake (PoS) system sometime between September and November. It would result in many PoW miners’ survival and revenue likely hanging in the balance. So, some of them are seeking a way to shape their post-Merge future: split the Ethereum chain to create ETHPoW.
Rather than joining forces with the Ethereum Classic (ETC) network, as some industry players have suggested, they want to create a fork of the coming Ethereum 2.0 network — which will be tagged as ETHPoS should there be a switch.
For those who have (not) been following the ETHPoW/ETHPoS/ETC debate — here are quick updates to relate with:
- In respect of ETHPoW becoming a thing (it doesn’t exist yet and might never exist), BitMEX exchange has announced it is going live with ETHPOWZ22 on Tuesday, August 9 as a linear futures contract that is margined in USDT (ERC-20). It differs from other futures contracts in several ways but key among them is its 0.00% Maker Fee and its Taker Fee at 0.25%.
- Gate.io says it will support the upgrade and has decided to distribute the potential forked “Candy “ Token ETHW (ETHPoW) and ETH holders on the platform would be able to swap their ETH into two “potential forked” tokens — ETHW and ETHS (ETHPoS) at a 1:1 ratio — and also allowed to swap their ETHS and ETHW back into ETH at the same ratio before the upgrade.
- MEXC is planning to do something similar to Gate’s.
- Poloniex says it will support ETHPoW with ETH donations from its more than 1 million holding to build the ecosystem if the fork that could create two parallel blockchains after the upgrade succeeds.
- Barry Silbert, the founder of Digital Currency Group which owns CoinDesk and Grayscale, stands behind ETH PoS and has no intention to support the ETHPoW fork. They think ETH miners should move to ETC.
- ETC has reportedly risen by 174% since July 13, as investors and traders speculate that the Merge will redirect a significant portion of hashing power to the PoW chain. The spike has been linked to The Merge as likely to have an impact on ETC, especially in terms of redirecting hash power to the network.
- As published in our latest ProBit Bits (Vol. 15), the planned PoS switch has been drawing attention to ETC. AntPool, the mining pool linked to mining rig giant Bitmain, has been for ETC. Bitmain has so far invested $10 million in ETC to support its ecosystem, and Antpool’s CEO, Lv Lei, disclosed at Bitmain’s World Digital Mining Summit that they plan to invest more.
- Between July 28 and 29, ETC’s hash rate historical chart showed it jumped to over 27 TH/s, an increase of 56% compared to the beginning of the month. Some reports say the number of active ETC addresses reached 66,200 while the number of daily transactions spiked to about 97,400 — an increase of 62.60% in July.
- In line with the decision by the Ethereum Foundation and the broader Ethereum community, the Chainlink protocol says — based on social consensus — it will not be supporting forked versions of the Ethereum blockchain, including PoW forks.
- Meanwhile, Ethereum founder, Vitalik Buterin, has reportedly characterized proponents of the ETHPoW fork as those “simply trying to make a quick buck.”